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Pathfinder Ranking

Financial IT¡¯s

digital bank RANKING

What are the two questions

that really matter?

In this edition of Financial IT, we are pleased to include our survey of digital banks, as a part of our commitment to identifying

global pioneers at the intersection of technology and financial

services.

We would stress that our ranking of digital banks is largely subjective. It is based on three criteria: media coverage of the digital

bank in question; apparent numbers of employees; and an assessment of the overall impact of the digital bank.

We note that there may be digital banks that have inadvertently

been omitted from the survey. We will be pleased to include them

in future editions of the survey. We also accept that there may be

compelling reasons why particular digital banks should be more

highly ranked than indicated by us.

Digital banks matter for three reasons. They have emerged from

nowhere in a relatively short period of time. Most are two years

old - or younger. Many of the digital banks use radical and new

technology to confirm the identities of clients and to meet Know

Your Client (KYC) requirements. In theory, the digital banks could

radically transform the financial services landscapes of the countries in which they operate.

The very phrase ¡®digital bank¡¯ identifies their key features. They

are financial institutions, overseen by banking regulators, who

reach their clients through mobile phone apps and/or through the

Internet. Like traditional banks, they offer a variety of products

and services - including, but emphatically not limited to, payments. Unlike traditional banks, they generally never have physical

branch networks.

Collectively, the digital banks have a number of features in

common. They are overwhelmingly business-to-consumer (B2C)

in their offerings. Some digital banks see themselves as businessto-business (B2B) operations, providing ¡®white label¡¯ solutions to

established companies that wish to go digital: however, these are

a small minority. The digital banks tend to focus on customers

who are in or near the countries in which they are based. For now,

the digital banks are catering to the Assets side of their custom-

ers¡¯ balance sheets. Deposit and savings accounts are vastly more

important than loans.

Nevertheless, the differences between the various digital banks

are at least as important as the similarities. The digital banks do

not all take the same approach, or use the same technology, to

verify the identities of clients and the validity of transactions.

Sometimes the digital banks are offshoots of long-established

traditional banks; others, not. Above all, the digital banks sell

themselves to actual and potential customers in different ways.

Some, for instance, emphasise the general convenience of handling a wide range of banking transactions from one¡¯s smartphone.

Others emphasise the user-friendly aspects of their apps. Some are

competing on the basis of low costs (in terms of fees paid by the

customer), while others include cards as a part of their offer.

As of late 2017, the UK appears to be the leading market for

digital banks, in that nearly one third of the companies in the

ranking are based there. For now, we attribute this to the general

sophistication of the financial services sector, customers¡¯ perceptions of the deficiencies of traditional banks, the vibrancy of the IT

community that is based in London and a positive attitude on the

part of the regulators.

In 2018, the UK may therefore be the country that provides the

answers to the two questions about digital banks that really matter.

One question is: what do potential customers of the digital banks really want? Are they primarily looking for low cost

solutions, and benefits from the branchless nature of the digital

banks? Alternatively, are the customers looking mainly for a user

experience that is only possible with cutting edge technology?

The answer to that question will shape the answer to the

second: how will the established banks react to the challenge

posed by the digital banks? One solution would be to leverage the

established banks¡¯ strengths such as scale, brand, and breadth of

offering. Alternatively, the established banks could transfer much

or all of their retail banking, or B2C, operations to separate digital

banking subsidiaries, and focus their core operations on commercial, or B2B operations. There are many other possibilities.

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Photo source:

Photo source:

Company: WeBank

Inception: 2015

Location: China

Parent Company: Tencent, a Chinese internet company

Founder(s): Ma Huateng, founder, president,CEO and executive board

member of Tencent

Zhidong Zhang (or Tony Zhang), co-founder, former CTO and

second-largest individual shareholder of Tencent

Team Size: over 1000

Website:

Geo Coverage: Asia

Description: Named WeBank after Tencent¡¯s popular messaging app

WeChat, the financial institution is the first private online bank in China.

WeBank is a commercial bank with an online focus that utilizes facial

recognition security software. WeBank offers small personal and auto

loans, and investment products through their online platforms. For seven

months period right after its official launch in January 2015, WeBank

disbursed over CNY 800 million in ¡°personal micro loans¡±.

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Photo source: fall2016.

Company: MYbank

Inception: 2015

Location: China

Parent Company: Alibaba and its affiliate firm Ant Financial

Founder(s): Eric Jing, President of Ant Financial is also MYbank¡¯s

Executive Chairman

Team Size: over 1000

Website:

Geo Coverage: Asia

Description: MYbank, one of China's first privately owned online banks.

MYbank is a challenger bank that provides an entirely digital banking

experience. MYbank provides inclusive and innovative financial solutions

for customers based in urban and rural areas.

4

Photo source:

Company: digibank by DBS

Inception: 2016

Location: Indonesia

Parent Company: DBS Bank

Founder(s): Piyush Gupta is Chief Executive Officer

and Director of DBS Group

Team Size: over 500

Website: digibank

Geo Coverage: Asia

Description: digibank is a smart bank shrunk to fit into your smartphone.

It¡¯s flexible, available and totally dependable with its high standards

of safety. digibank is brought to you by DBS Bank, one of Asia¡¯s leading

financial institutions that¡¯s recognised as the ¡®Safest Bank in Asia¡¯ by

Global Finance for seven consecutive years.

Photo source:

Company: CBD NOW

Inception: 2016

Location: UAE

Founder(s): Dr Bernd van Linder, CEO of CBD

Team Size: over 500

Website: cbdnow.ae

Geo Coverage: Middle East

Description: CBD NOW is the UAE¡¯s first digital-only bank targeting millennial and digitally connected customers.

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Photo source: smithqueensu.ca

Photo source:

Company: BankMobile

Inception: 2015

Location: USA

Founder(s): Jay Sidhu, Luvleen Sidh

Team Size: over 500

Website:

Geo Coverage: America

Description: BankMobile is a mobile application that offers a branchless

banking experience without fees.

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Company: EQ Bank

Inception: 2014

Location: Canada

Parent Company: Equitable Bank

Founder(s): Andrew Moor,

President and Chief Executive Officer at Equitable Bank

Team Size: over 500

Website: eqbank.ca

Geo Coverage: Canada

Description: EQ Bank is focused on providing a better banking experience ¨C one that makes sense in today¡¯s go-anywhere, do-anything

world. That means to give online money access 24/7 and a personalized Customer Care Centre that¡¯s not limited to banking hours. With no

branches,EQ Bank offers clients great interest rates and no monthly fees

on EQ Bank Savings Plus Account. EQ Bank is launched by Equitable

Bank, a bank with over four decades of experience in the Canadian

market.

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Photo source: chroniclelive.co.uk

Photo source: chroniclelive.co.uk

Company: Atom Bank

Inception: 2014

Location: UK

Founder(s): Anthony Thomson, Mark Mullen

Team Size: over 200

Website: atombank.co.uk

Geo Coverage: Europe

Description: Atom is building the UK¡¯s first bank designed specifically

for digital, offering easy and convenient banking, along with unique and

engaging ways to manage money. Atom has been recognised in KPMG¡¯s

2016 Fintech 100, being in the Top 10 companies using technology to

drive disruption globally within the financial services industry.

Company: Hello bank!

Inception: 2013

Location: Belgium

Parent Company: BNP Paribas

Founder(s): Jean Lemierre, Chairman, BNP Paribas

Team Size: over 500

Website: hellobank.be

Geo Coverage: Europe

Description: Hello bank! is a digital direct bank owned by BNP Paribas

that started operations in 2013. The bank operates in France, Belgium,

Germany, Italy and Austria. BNP Paribas has claimed that is "the first

100% digital mobile bank in Europe".

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Company: K Bank

Inception: 2017

Location: Korea

Parent Company: KT Corporation, formerly Korea Telecom, is South

Korea's largest telephone company

Founder(s): Established by Financial Services Commission

Team Size: over 200

Website:

Geo Coverage: South Korea

Description: K-Bank provides online banking services which include

handling deposits, loans, credit cards, and providing wealth management products. The company is based in South Korea. K-Bank operates as

a subsidiary of KT Corp.

Photo source:

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Company: Starling Bank

Inception: 2014

Location: UK

Founder(s): Anne Boden

Team Size: over 50

Website:

Geo Coverage: Europe

Description: Starling Bank is creating a mobile app that will replace its

clients' current accounts so they can make better decisions with their

money.

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Photo source:

Company: N26

Inception: 2013

Location: Germany

Founder(s): Valentin Stalf

Team Size: over 200

Website: next.

Geo Coverage: Europe

Description: N26 is Europe¡¯s first Mobile Bank with a full European banking license and is setting new standards in banking. N26 has redesigned

banking for the smartphone, making it simple, fast and contemporary.

Opening a new bank account takes only eight minutes and can be done

directly from your smartphone. Users receive mastercard to pay cashless or withdraw cash all around the world. They can block or unblock

their card with a simple click and send money instantly to friends and

contacts.

Ricky Knox

Photo source:

Company: Tandem Bank

Inception: 2013

Location: UK

Founder(s): Matt Cooper, Michael Kent, Ricky Knox

Team Size: over 50

Website: tandem.co.uk

Geo Coverage: Europe

Description: Tandem is creating a better bank, challenging legacy banking by building an app and products with input from their community of

users. Tandem's goal is to make money simple, help their users save, and

to free up their time from financial stress. Ultimately, Tandem aims to

become a one-stop-shop for financial needs.

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